debt

Think back to a time 100 years ago in this country, or any country. Now picture a well-dressed man or woman walking down the street, his clothes neatly pressed and a little nicer than the norm. Out of his pocket dangles a shiny pocket watch. On top of his head sits the hat of a gentlemen or lady or whatever term they used to denote status symbols back then, and in his clutch a walking stick with a brass top, not for walking, but more for effect. Sounding old-timey enough yet? Now stop, and picture the exact same man in the present. Also dressed in current modern-equivalent flashy clothes, perhaps with a large faced wrist watch, a modern smart phone, a high end woven shirt, and stepping into a new Mercedes.

I know, I know. Not the best picture for a status symbol.

It may seem like these are just two people playing out their respective fashions in their era-equivalent settings and perhaps peacocking a bit, as men and women of a certain age are known to do. There are however some small but important differences in the causation and manifestation of the style of each that makes all the difference.

The man from 100 years ago could only have possessed the items that made him stand out through a few means: family money, personal success, connections, … maybe theft. Outside of that, there weren’t a lot of options for buying things if you didn’t legitimately have the money. The modern version of the same man can have everything he flaunts with merely a job at Walmart-Cars, clothes, phones, watches, can all be bought on credit, meaning you don’t need money to attain them. You simply need to go into debt. You will also need to keep working to repay this surging debt that is slowly burying you. By the time you figure this out, a new generation will have been marketed to replace you in the debt funnel. His status symbols are not the indicators they once would have been and here’s why….

1) Status symbols no longer represents financial success.

7 year car loans, 30 year mortgages, 10 year student loan repayments, rolex financing, home improvement loans, cruises, lodging, vacations, and general purpose credit cards can all be had within a few years of reaching legal adulthood. Every 20 year old can display an illusion of financial achievement that would make George Vanderbuilt (He was a super rich dude) a little jealous (He never had a smart phone).

2) Status symbols are no longer the same indicator of emotional maturity.

I think it was Harrison Ford who said something like ‘Success is meeting the right people and not pissing them off’. This takes emotional intelligence-an ability to understand your own emotions, see them in other people, know what they’re feeling, lead, and interact with people in a way that doesn’t limit you due to rough edges in your professional and personal interactions. This ultimately increases your chances of success in life and it all started with building your emotional EQ. A person doesn’t need to adhere to this model if they are simply going to borrow money to get what they want. The rough edges can remain and the repercussions may not catch up for much longer.

This is likely an indicator that they have not witnessed enough business cycles to demonstrate an understanding or mastery of whatever their chosen subject may be.

Do you know which demographic is the most susceptible to marketing? It’s whichever one doesn’t realize they’re being sold something. On some level this has to be an indicator of a persons perception abilities. Those that maybe don’t realize they’re being trendy are most likely to jump on the current trend along with the next one to come, fore-fitting their long term financial prosperity in order to not be an outcast to materialistic modeling.

Since only 6 percent of individual earners (According to the 2013 census) earn more than 6 figures(It was closer to 20% for married couples), it’s simple math that everyone living the 100k lifestyle is not as financially robust as they are presenting themselves and there’s only a couple of ways that could be possible-No debt, or tons of debt.

Doing and achieving are often separated from looking successful. Take action and accomplish whatever it is you have your mind focused on and forget about looking successful. Being successful in your contentment is both, infinitely more authentic and rewarding. Ironically, in a world of debt slaves, it also gives you a huge leg up at actually gaining two of the hardest things to buy-financial security and peace of mind. Financial security, because you truly own the things possess, and peace of mind because you don’t need to make financial decisions out of fear anymore.

My view of everything changed after I didn’t have any debts. It changed in ways that took me a while and some reflection to really understand and to be able to write them out on paper, even though I could feel the change pretty quickly. I took several months to really let everything sink in. Here’s what I experienced realizing I had a more complete financial freedom than ever before. I still I wouldn’t have absolute financial freedom until I no longer needed to work for someone, but for now this was a huge life upgrade. Here are 5 definite things that changed for me by getting out of debt.

1) I stopped making decisions from a place of fear and necessity.

2) I became less willing to put up with bullshit as I no longer needed to operate from a place of financial dis empowerment.

“I don’t want to do that, and since I don’t need the money, I’m not going to do that” Work a holiday. This was actually a problem for me since I still needed a job but felt like I didn’t need to be pushed on at said job.

3) The speed at which I could complete projects was faster than it had ever before (Due to free cash flow).

5) I felt like I was moving forward instead of just maintaining my place in life.

Little stuff like auto repairs I had been putting off got fixed, little details around the house got repaired-door trim walls painted, door knobs fixed, etc. I was able to finally buy new t-shirts (At a discount store of course), shoes, and underwear (Yeah, I said underwear. no not used). I bought some new used tools that allowed me to make and repair other items I had been putting off. With each opportunity I seized, more and more became available. Will my new found cash flow, I realized I could start making more money. I’m not trying to sound like a Rockefeller and I’m not trying to brag. I still had a long way to go financially. This was just my experience of how money started to change.

6) Another unexpected revelation was that I wasn’t seeing linear growth in any of the previously mentioned areas.

Some areas were growing exponentially, at least initially. All of the major areas seemed to be amplified. I got a new home gym-used of course that allowed me to get “healthier” workouts. I was able to connect with people over some low cost activities. I was able to start investing and finding ways to make more money, send that money back into other projects that had been neglected, and speed thing up even more, like a feedback loop. I was able to give back to the people that had helped me along this journey. I didn’t feel vulnerable anymore financially and this made me feel strong enough to start fixing some of the holes in the lives of people close to me, financially and otherwise. I was able to really launch my healthy, wealthy, and wise philosophy significantly further and at a speed greater than before.

All of this isn’t to brag, quite the opposite. I want to peel back the curtain on the ways your life can be different and reassure you that the journey is worth the pay out, because the road is difficult and longer than I’d like.

The original post on DIY money saving tips should have already saved you about $2000/yr on your energy costs. If that wasn’t enough, here are 10 more ways to start putting a serious dent in some of life’s operational costs. With that in mind, here’s a list of things you can get crackin’ on today to realize some solid savings asap. Many of them won’t even cost you anything up front, others require a very small cost to begin to save on energy.

Without further delay lets save some money on energy costs now!

1) Switch to drip irrigation.

If you can put Legos together, you can install drip irrigation. It uses dramatically less water than traditional sprinkles and bubblers without wasting as much water to evaporation. Thy work using low water pressure to drip water onto the soil and wet it over time instead of trying to flood it. Because of this, less water is wasted to evaporation and run off, effectively getting the water right where you want it.

2) Clean the coils on your fridge.

Cost: $0.00. If you’re like most people, you’ve never ever cleaned the coils on your fridge, and chances are good that neither did the person before you. So what the hell are the “coils”I speak of? Anything that cools air, has coils, and they need to be cleaned, whether it’s your car, air conditioner, or fridge. The coils are usually located on the bottom or the back of your fridge. Over time, they get coated with dust, lint, and dirt. This lowers the efficiency because they don’t transfer heat to the outside air as well. For a fridge, I’d simply unplug it, roll it away from the wall, vacuum out the lint, and maybe wipe it down with a rag or paper towel. It doesn’t need to be clean enough to eat off of, just relatively gunk free.

3) Turn the temp on your fridge and freezer to the Min allowable amount.

Cost: $0.00. Have ever noticed that there is a temperature setting ranging from cold to colder for your fridge and freezer? Well you can adjust this to be just a little bit less cool. This makes your fridge work a little less hard and you save the extra energy that it no longer needs. If you can turn a knob, you can save some money here.

4) Make a rain water collection system to water your yard and garden.

Cost: $50-150. Awe the joy of growing things: Plants, lawns, trees, gardens; all ripe with green foliage, flowers, shade, and a pleasant habitat to boot. Like all life, they need water but that doesn’t mean I need to keep paying so much for it. After all, it literally falls from the sky when it rains. That’s when I figured, why not collect it from my gutter system and just save it for a sunny day when my plants need water. I found a few decorative rain collection barrels at a liquidation store and have been using them for this ever since. If you don’t care as much about the appearance, you can just use a couple of food grade 55 gallon plastic barrels, paint the outside of them and pat yourself on the back. I’ve found several of these on craigslist. Pour in a bit of dish soap to keep mosquitoes from laying eggs in them though.

5) Turn up you hot water heater as the weather outside begins to get warmer.

Cost: $0.00. Also, anytime, I’m going out of town, I’ll set this on the vacation setting. It’s typically labeled on the red dial. If not, I’ll just set it to low. No point in heating water if I’m not even going to be there.

6) Mulch anything that needs to be watered.

Cost: $0-$10. Spread mulch around anything you water, from garden plants, to trees, to flowers. This will not only give the soil, and thus the water, some insulation from the suns hydro evaporating rays, it will create a welcome habitat for beneficial soil organisms like worms. All this while lowering the frequency with which you need to water and saving you some water mullah on your next bill.

7) Electric Water heater timer.

If you live in a cold climate this applies especially to you. You may need to evaluate your hot water usage schedule, but if you’re like most people, you probably use hot water in the morning, and then not again until the evening. All this time in between, all day and all night, your water heater is still burning electricity to keep 40-50 gallons of water hot for you. With a hot water heater timer, you can have it turn off and then back on again, only just before you need it. These are about $40 buck on amazon and you may need to have someone install it if you’re not up to it. Better yet, find a friend who is up to it and help them with something they need in exchange for installing it. Even so, it should start recouping some savings within a year. While you’re at it you could…….

8) Install a Water heater insulation blanket.

A hot water insulation blanket is simply an insulated blanket that helps hold heat into the water heater. The less heat that escapes, the less energy it takes to maintain the water temperature.

9) Check your attic insulation.

Some homes had more lax building codes for insulation. Others had none at all, as was the case with mine. If you see that the insulation has fallen away or looks a little thin, you may see an improvement from simply fixing it. Most of the improvements you’ll see here come from fixing insulation “failures” which can just kind of happen over time.

10) Replace old refrigerators and freezers with newer craigslist models.

I am not recommending that you run out any replace your fridge just to replace it, but if your fridge is one of the old 80’s or 90’s ones, you could see a big improvement in efficiency by upgrading to one newer than 2005. Again, if you just go to home depot and spend $1200 on a new fridge, it’ll be 20 years before you recoup your costs by saving on electricity. So what am I proposing? Go on craigslist and find a new-ish model that someone is upgrading. You should be able to do this for much less than 1/3 the cost of a new one. Some people will even deliver if you offer them an extra $20 or $30.

Deferred gratification is a great sign of maturity and long term planning but every now and then it’s nice to find things you can go right out and put in action immediately while your long term plans mature into reality. With that in mind, here’s a list of things you can get crackin’ to on today to realize some solid savings asap. Now let’s save some money!

Estimated total annual savings for all items: $2054

That’s like getting a $2400 raise before taxes, and I didn’t even count 1 of the 10 items!

1) Internet (I saved $30 by downgrading and yes Netflix still works fine).

Did you know that every single cable company out there offers different levels of internet speed? I was paying for the top package at $73/month (50mbps). I downgraded to the lowest package for $39/month (5mbps) and have never looked back. I can still stream Netflix without any issues. If multiple people are on I do notice some lag time though. Do you want to save $408 a year or not ($34×12=$408)

2) Natural Gas (Turn you hot water heater down).

Have you ever jumped in the shower and realized the water was way to hot? The truth is most hot water heaters are turned up a little higher than most people can handle. If you have a gas water heater, you’re burning a lot of natural gas for this extra heat. Consider turning the temperature knob on the heater down a little and save an easy $5 or $10 a month or more if you’re in a really cold climate. That’s another $60-$120 a year.

3) Haircuts (Monthly 10% discount at several places such as sport cuts).

Some chains offer a discount if you return within 30 days for your next haircut. It’s $3 off $15 at sport clips where I get my hair cut. Little numbers add up so check it out. It’s $36 more a year.

4) Cell Phones (I saved $35 switching to boost mobile).

This is a big one for a lot of people. They get lured in by the big cell phone company providers to thinking that monthly cell phone service has to cost $80 a month. Did you know that you can get a pretty decent phone service plan from Walmart, usually for about $40 or so. I personally have been getting unlimited talk, text, and data (almost unlimited) for $44(after taxes) from Boost mobile for the last several years. Google Fi is another cheap but effective carrier. With the savings, I just do my own phone upgrades, usually 1 model behind the newest phones. I saved another $432/year by doing this ($36×12=$432)

5) Save on Cable.

Ok, this one is a bit misleading. I’ve led you here to trap you into cancelling your cable. After all can’t you watch most of your shows online these days. Even if you couldn’t, it’s a great way to save money and get time back in your already busy day. Let’s just say this saves $10 a month since you’ll have to pay $8 for Netflix. Side note if you have young kids. Did you know you can find cartoons on YouTube as well as old movies. Yearly savings: Another $120

6) Gym Memberships. “Exercise is free.”

That’s what a very fit friend of mine told me one day when we were talking about the gym. I rolled it around in my head one day and realized that she was right. I cancelled my gym membership, got some free weights, laced up my running shoes, and started saving $360 more bucks a year ($30×12…..You get the idea. I’ll tally it all at the end.)

7) Car Insurance.

Maybe you can save some money on car insurance and maybe you can’t but it’s definitely worth checking into. Maybe you can combine things such as home, additional drivers, and good driver discounts if your situation has changed since you last looked. You never know if you don’t ask.

8) Gasoline (Use cruise, tune up, inflate tires, etc.).

Some things in life are just fixed. The price of gas is one of these. After all it’s not like you can store a giant reservoir when the price drops. You pretty much have to pay what it costs, but that doesn’t mean you need to use so much of it. Here’s how I hack out some extra gas savings gaining me about an 11% increase in mileage on my high mileage car: Annual savings for me 11% of my budget ($120)= $158.40/yr

This one blew my mind when I discovered it. I’ve been saying for years that meat is one of the hardest things to save money on. If this cuts down on just one less 10lb bag of chicken per month at $20 per bag, it would save you an additional $240/yr.

They eat weeds and bugs. They fertilize your garden. They don’t take as much space as you think. Let’s say that this saves you a very conservative $15/mo in eggs depending on the size of your family and the number of chickens. That’s another $180/yr in savings.

How I re-roofed my house for $750 and got $400 off my insurance premium.

It was about 4 years ago. I had just bought a fixer upper that needed a considerable about of work. Among the worst of which was a badly worn out roof that leaked in multiple, multiple locations (Yeah, I said multiple twice.). I was pretty strapped for cash but knew getting it re-roofed needed to be a priority if I was ever going to bring the rest of the house up to a livable standard. I began to research articles online to arm myself with some badly needed roofing knowledge. I also started doing some serious window shopping at my local home depot, as well as several used building supply stores(They often have new stuff as well). In addition to this I made a new friend called craigslist(It’s been a financial love affair ever since) and started stopping by yard sales that had shingles and roofing supplies for sale.

It was at about this stage that I realized my house was the next one over which explains why the neighbors were so pissed.

With some research, I learned that I could locate the existing leaks in the roof and coat them with a healthy amount of tar to stop the leaks. This would buy me the time I needed to take this roofing situation out of the emergency category and into the ‘you’ve got some time’ category. I then spent the next 6 months stalking down deals here and there, mostly on craigslist.

Sure enough, opportunities began to show themselves. I found several roles of heavy duty roofing tar paper, along with a case of roofing nails in one craigslist add. I found flashing, drip edging, and roof tar coating in another. I was able to track down an almost new roofing nail gun on ebay for 1/3 price. After several more successful replies to for sale adds I had accumulated almost everything I needed except for many of the shingle packages were different styles. All in all I had about 8 roles off roofing tar paper, a case of nails, drip edge, tar,… Then one day winter day I found an add for architectural dimensional shingles (the nice ones that they put on newer houses). I went over that same weekend and bought around $400 worth which was all I would need. All told, I had spend about $750 on everything at this point. I felt like I had gotten a great deal and was ready to get down to the hard labor.

I set a date on the calendar for an upcoming weekend and let several of my most trustee friends know that their help would be greatly appreciated if they could make it. At this point maybe some of you are probably thinking “But what about your time? You must have spent hours picking all of these things up?”. But as I have detailed here, that was time, I wouldn’t have been paid for anyway or otherwise earning money. What I could do with this time thought was invest it in saving the cost of my future spending dollars that I would have otherwise needed to earn to buy supplies at full price.

I started to realize that roofing supplies are bought and sold in cycles. People may buy them in the spring or summer to do a repair and by fall, they just want them out of their garage. This worked out to my advantage. I had extra shingles left over after the job. Maybe 10 or 20 packages. I had paid no more than $5-$10 a packet for them but I found that when I went to sell them, it was now the busy season for roofing and the price had gone up. I think I sold all of them for about $275.

1) Buy time if possible 2) Gather supplies from the lowest cost source over time if necessary 3) Can you do this job your self? With a couple of friends? 4) Can you learn this skill from a win/win scenario like volunteering? 5) Can you recoop any of your costs after the project? Selling nail gun, roofing shovels, tar, nails, extra shingles, insurance discount. 6) Can you trade labor with someone else who needs help on a project? 7) You will have grown from the experience by expanding your abilities. This makes learning the next skill go even faster. You start to build a format for future projects and life.

It’s not how much you earn, it’s how much you save. It’s not how much you make; it’s how much you keep. That’s the saying that sticks in my mind when thinking about smashing through debts in my journey to live unshackled by bills, mortgages, economic servitude, and just payments in general. Sayings are all fine and well to keep sight of your goals or gather some motivation when you just need a boost, but I wondered beyond that, how the actual numbers and actual facts, supported or contradicted this bit of feel good folksy wisdom. With this in mind I set out to crunch some numbers. How much would a person with no debt need to make to achieve the same amount of take home pay as a person with typical debts of a person in the United States.

Now all of this is simply to achieve the same amount of excess cash per month (For savings or something like that) as someone who makes 100k with basic debt. This doesn’t fully show the entire picture. What about lifestyle, stress, and the ability to buy things that you want? Granted, it’s true that the six figure income probably qualified you for a nicer house, in a nicer neighborhood, with a nicer car, but beyond the extra sparkle and shine, is there a functional difference to the value of your life, your happiness, or your stress, as long as you have a safe, quiet, reliable house or car? Should I be measuring lifestyle in house square footage, the year of my car, designer watches, and top of the line clothes, or does it make more sense to measure my wealth in free time, financial security, and the ability to cultivate meaningful experiences.

Let’s look at how a six figure income shapes up after some basic debts

100k after taxes=74116.25 or 71016 (depending on who you ask).

Then you must subtract the following

Mortgage -1500 Car payment -300 Student Loan Debt -300

This comes out to 48916 when considering 74116.25 take home. This comes out to 45816 when considering 71016.00 take home.

-25,200/yr in debts

You keep $48,916.25

Now let’s look at how $60k shapes up against the same scrutiny.

60k after taxes=47226.25

-$0 in debt

You Keep $47,226.25

That’s nearly identical in terms of having disposable income. Perhaps about now you’re thinking ‘Yeah, but I’d rather just make the 6 figures’? The beauty of this concept is that is DOES scale with additional income. You can make any amount you’re capable of and your financial security and mobility will be better without debt or with minimal debt. But since only 6 percent of single income US earners (according to the last census) actually earn 100k or more, (Roughly 19 percent of 2 income familys earn over 100k annually) you may want to do whatever you can to stack the deck in your favor.

With either income amount you still get many of the same benefits, one is just easier to attain and comes with additional insulation from risk associated with six digit amounts of debt. Here’s a short list:

Vacations Financial security/coushin from economic down turns Free time with loved ones The ability to travel Investment power Stress insulation Health

I’m definitely not saying that poverty is a virtue, quite the opposite, but living below your means and being financially effective is quite different from living in poverty.

The point of all of this is to showcase that eliminating debt can mean the same thing as getting a very large raise. Consider this analogy; Let’s say that money is your fuel for getting through life. You and the Mr. Jones both have 20 gallons of fuel in your savings accounts. You elect to buy a car that gets 30 miles to the gallon while Mr. Jones congratulates himself on buying a hummer which gets 8 miles to the gallon, costs 2x as much for insurance, and has greater maintenance costs. Who is going to have a harder time on the road trip of life?

There’s absolutely nothing wrong with making a lot money, but don’t fall into the trap that so many people do-feeling a false sense of security, loading up even more debt, signing a contract to spend the next 40 years of your life paying for this, and risking your well being on a paycheck that you are now dependent on to support a lifestyle that owns you. Not the other way around. It’s so much more freeing to know that no one controls your financial security-not your mortgage lender, not the car dealership, not that student loan you still have, not even a credit card company. This is your life and if you structure it carefully, with some forethought, you can rest easy knowing that you have true financial freedom that can’t be taken away by the next round of layoffs, predictable economic downturns, recessions, war, or interest rate changes.

Economies wax and wane, housing prices fluctuate, and whispers of the next war can all change your priorities and status when they were leveraged by debt.

More food for thought

Use these compound interest calculators to calculate how much money just 5 years of your debts would become in 30 years if invested.